No alarms in weak March job gains

April 0523:082015

Economists don’t view the government’s report Friday of a skimpy 126,000 job gains in March as a harbinger of sluggish payroll growth in 2015, but several anticipate a slowdown from last year’s breakout advances. Unseasonably cold weather and oil-industry layoffs helped snap a 12-month string of employment gains above 200,000 as the economy added the fewest jobs since December 2013. The unemployment rate was unchanged at 5.5%, the Labor Department said.

Economists surveyed by Action Economics expected 248,000 payroll additions. Adding to the disappointment was a 69,000 downward revision to job gains in January and February. As a result, monthly payroll growth averaged 197,000 in the first quarter, down from 317,000 in the October-December period. Yet low initial jobless claims continue to point to a healthy labor market, says Jim O’Sullivan, chief U.S. economist at High Frequency Economics. “The data can be volatile and one disappointment after a series of upside surprises is not very concerning,” he wrote in a research note.

Besides the nasty weather, the economy has been feeling the aftereffects of a labor dispute at West Coast ports that snarled shipments. But other economic headwinds, including the energy-related job losses and a strong dollar that’s hurting manufacturers’ exports, could persist. After notching average monthly job increases of 260,000 last year, a 15-year high, payroll growth should average a still-solid 200,000 to 225,000 the rest of the year “as economic activity moderates to a more sustainable trend,” predicts Michael Gapen, chief U.S. economist of Barclays Capital.

Wage growth, which has been sluggish throughout the recovery, ticked up modestly in March. Average hourly earnings increased 7 cents to $24.86 an hour. Over the past year, pay is up 2.1%, in line with previous tepid advances. The average workweek dipped to 34.5 hours from 34.6 hours, possibly signaling reduced demand for labor and a slowing in job growth ahead. Last month, businesses added 129,000 jobs, and federal, state and local governments cut 3,000.